JAPANESE gas customers have moved to protect their long-term access to gas from Woodside’s Pluto and Browse LNG projects amid increasing competition from rival Korean and Chinese customers.
JAPANESE gas customers have moved to protect their long-term access to gas from Woodside’s Pluto and Browse LNG projects amid increasing competition from rival Korean and Chinese customers.
In its June quarter report, Woodside revealed it had secured three new strategic exploration permits off the Western Australian coast: one near the existing Pluto and North West Shelf projects off Karratha; and two in the Browse basin off the Kimberley coast.
Off Karratha, Woodside teamed up with longstanding LNG buyer Japan Australia LNG to secure the WA-448-P permit, in which they each now hold a 50 per cent interest.
Japan Australia LNG, which already holds a one-sixth stake in the North West Shelf project, is a joint venture between major Japanese conglomerates Mitsui and Mitsubishi.
Woodside and its Japanese partners pledged to spend almost $36 million on exploration and evaluation work over the next six years, including at least one exploration well.
Woodside has listed the permit under Pluto even though it lies just 25km from offshore production facilities at the Shelf.
In the Kimberley, Woodside teamed with Mitsui to win the adjoining WA-447-P and WA-449-P permits approximately 100km south-west of its planned $30 billion Browse LNG development.
Woodside will hold 75 per cent of the two permits, and with Mitsui, will spend $70 million on exploration over the next six years.
The joint ventures provide the Japanese groups with direct exposure to future exploration around the Pluto and Browse LNG developments.
In the event of a major discovery, it will not only guarantee a proportional share of discovered gas reserves, but also provide greater leverage should they seek a direct stake in subsequent LNG processing infrastructure.
Currently Woodside holds more than 50 per cent of the Browse venture with the remainder split between its industry partners BHP Billiton, BP Chevron and Shell.
However, the partners are expected to offer some equity in the project to major customers as part of any off-take negotiations.
At Pluto, Woodside has already sold a 10 per cent interest in the initial $13 billion development due to come on-stream early next year to Japanese utilities TEPCO and Kansai Electric.
Woodside also indicated it could divest up to 35 per cent in the second and third LNG production trains it plans at Pluto, subject to it sourcing sufficient gas through discovery or third party tolling arrangements.
Woodside is expected to indicate at its mid-year briefing on August 18 whether it will defer approval for the second Pluto train until early next year following disappointing drilling results last quarter. Two key wells are currently underway in the area at the Larsen and Camus prospects.
